5 Stocks Set to Benefit from the Government’s Rs 10 Billion Allocation for Rare Earth Magnet Production

Pardeep Sharma
9 Min Read

From EVs to clean energy—this is the next big leap in self-reliance and innovation 

The Indian government has announced a ₹10 billion (₹1,000 crore) investment plan to boost rare earth magnet production. These magnets are essential for electric vehicles (EVs), wind turbines, mobile phones, and many electronic items. India currently imports over 90% of its rare earth magnets from China. With rising global tension and China’s decision to limit exports of some rare earth materials, India is now focusing on becoming self-reliant in this strategic area. 

This move opens up big opportunities for several Indian companies, especially those already working in electric vehicles, mining, and magnet technology. Five companies in particular are expected to benefit the most from this initiative. These include Sona Comstar, Tata Motors, Hindustan Zinc, IREL (India Rare Earths Limited), and a group of emerging companies like Midwest Advanced Materials and Entellus Industries. 

Sona Comstar: Leading the Charge in EV Motors 

Sona BLW Precision Forgings, also known as Sona Comstar, is one of India’s biggest manufacturers of parts used in electric vehicle motors. The company currently imports large quantities of rare earth magnets, as they are vital for making high-performance motors for two-wheelers and cars. In the last financial year, Sona Comstar imported about 120 tonnes of magnets and plans to increase that to 200 tonnes this year. 

The company has already shared its intention to start making rare earth magnets within India. This makes Sona Comstar one of the most direct beneficiaries of the government’s incentive scheme. With access to funds and policy support, Sona Comstar is likely to set up new manufacturing facilities. This will help reduce costs, lower dependence on foreign suppliers, and improve margins. Given its strong partnerships with electric vehicle makers like Tesla, the move will also improve its global competitiveness. 

Tata Motors: Securing the Future for Electric Cars 

Tata Motors is a household name in India and is already a market leader in the electric car segment. Its subsidiary, Jaguar Land Rover, is also a major player in global luxury electric vehicles. Both Tata Motors and JLR rely on rare earth magnets for building EV motors. So far, Tata Motors has managed its supply chain well and hasn’t faced any major shortages despite China’s export restrictions. 

With the government’s new scheme, Tata Motors will benefit from a more stable and domestic source of magnets. This will help reduce supply risks and ensure smooth production in the future. The initiative will also lower the costs of EV components, helping Tata remain price-competitive. As India pushes for more EV adoption, Tata Motors is well-positioned to scale its operations with the help of locally made magnets. 

Hindustan Zinc: Unlocking India’s Rare Earth Potential 

Hindustan Zinc, which is part of the Vedanta Group, is India’s largest producer of zinc, lead, and silver. The company has shown interest in expanding into rare earth materials. Its leadership has spoken about India’s monazite reserves, a mineral that contains rare earth elements like neodymium, which is critical for making magnets. 

As rare earth magnet production increases in India, Hindustan Zinc is expected to play a major role in providing the raw materials. The company can benefit by supplying minerals to magnet manufacturers or even by setting up its refining plants. With the government offering subsidies and policy support, Hindustan Zinc may enter a new phase of business expansion, contributing to the rare earth ecosystem from the mining side. 

IREL (India Rare Earths Limited): A Strategic National Asset 

IREL is a government-owned company that already operates India’s largest rare earth production facilities. It has several plants across the country and recently started making special magnets like samarium-cobalt magnets at its Visakhapatnam unit. IREL controls large reserves of rare earth minerals and has the technical capability to process them at a large scale. 

The new ₹1,000 crore incentive scheme is expected to give IREL a significant boost. Since it already has infrastructure and government backing, IREL is likely to lead the charge in developing a fully domestic supply chain. The company can expand its capacity to meet the rising demand from electric vehicles, electronics, and renewable energy sectors. IREL will not only produce magnets but may also supply rare earth oxides to private companies. This makes it a central player in India’s rare earth ambitions. 

Midwest Advanced Materials & Entellus Industries: Emerging Innovators 

Midwest Advanced Materials, based in Hyderabad, and Entellus Industries are two rising names in the rare earth magnet space. While they are smaller compared to the likes of Tata or Sona, they have shown strong technical capabilities. Both companies are already working with the government to set up rare earth magnet plants. 

These companies plan to start with small-scale production of about 500 tonnes per year, with the possibility to expand over time. They are likely to participate in the reverse auction model proposed under the production-linked incentive (PLI) scheme. This system rewards companies that offer the lowest cost of production while meeting quality standards. With focused investments and strategic support, these emerging players may grow rapidly and play a critical role in filling the demand-supply gap. 

Government Strategy and Market Demand 

The government’s allocation of ₹1,000 crore is just the beginning. Officials have hinted that the budget could go up to ₹5,000 crore based on demand and industry response. The scheme is aimed at attracting private investment and speeding up project implementation. It also encourages collaboration between industries, research institutions, and government bodies. 

India’s current rare earth magnet market is valued at around USD 637 million. It is expected to grow to almost USD 1 billion by the year 2033. The main drivers of this growth are the electric vehicle industry, wind energy projects, smartphones, and other electronics. As India moves toward becoming a green and self-reliant economy, the demand for rare earth magnets will only increase. 

Why Self-Reliance in Magnets Is Important 

China controls more than 80% of the world’s rare earth magnet supply. India imports more than 90% of its magnets from China. This dependence has become a risk, especially after recent export restrictions by China. Any disruption in supply can slow down production in important industries like electric vehicles and clean energy. 

By investing in domestic magnet production, India is not just securing its supply chain but also creating new jobs, reducing trade deficits, and encouraging innovation. This push will help the country meet its energy and industrial goals more efficiently. 

The Road Ahead 

India’s magnet mission is a bold and strategic move. It brings together policymakers, companies, scientists, and engineers to build something vital for the country’s future. Companies like Sona Comstar, Tata Motors, Hindustan Zinc, and IREL are well placed to take advantage of this shift. New-age firms like Midwest and Entellus will add innovation and speed to the process. 

As the investment plans move forward and production starts, these companies are expected to see higher revenues, stronger supply chains, and long-term growth. Investors and industry watchers will be keeping a close eye on how this magnet story unfolds. 

The next few years will decide how successfully India can build its own rare earth magnet supply chain. If done right, it can reduce dependence on foreign powers and strengthen the country’s position in key global markets. 

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Pardeep Sharma is an experienced content writer specializing in technology, cryptocurrency, and stock markets. Known for crafting engaging, thoroughly researched, and SEO-friendly articles, he excels at simplifying complex topics into content that is accessible and impactful. With a keen eye on emerging trends, Pardeep creates compelling narratives that educate and resonate with diverse audiences across digital platforms.
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